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Ladies and gents....
Check out the document or memo sent to staff at Apple today..

"Team,

Today is a historic day of sorts for our company. When I arrived back at Apple in mid-1997, the company was burdened with $1 billion of debt. Through everyone's hard work we turned Apple around, paid off the majority of our debt and began to amass a war chest of cash in the bank which has grown to about $4.8 billion! But there was still $300 million of remaining debt, which we decided to hold to maturity.

Today we used $300 million of our cash to pay off this remaining debt.

Apple is now a debt-free company – for the first time in over a decade!

It sure feels good.

Steve"

I think his wording says it all, expect another big year from Apple. The buildup of a war stock of cash! This is exciting news..

Macrumors.com was the first to report on this.
Another produ day to be a mac owner.
 

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Not having to pay interest on this overhanging debt will allow more money to accumulate at a faster rate. This is all good. ;)

A few more winning items like the iPod and MicroSoft's continuing problems with viruses and security might just boost Apple into being a major player in the next few years. No more "niche".

I think it's the fear of buying into a dying platform that keeps so many people loyal to Redmond.

Show them that we really have something here...it's NOT "going away" anytime soon...and that it's actually BETTER...and we will see a much bigger slice of the pie.

Like I said, all good stuff. :cool:
 

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As far as I know, Apple has always been cash-rich. During the dark days of losing money quarter after quarter in the mid-90's, they had about $US 2 billion in cash.

Managing debt and cash is important, but owing a bit of money is not all bad, even if you can afford to pay it off. It depends on your business situation and your plans.

Software companies generally have a fair wad of cash laying around because they want to be able to jump on new technologies or buy up smaller firms to incorporate products into the applications they develop.

One danger of being cash-rich is that it makes you an attractive take-over target, and the kind of people who are attracted aren't nice people either.

It's a common strategy to offer a high price to shareholders, get control of the company, then use the cash of the company to pay off the money you borrowed to buy it in the first place.

The evil part is what comes next: you make your profit on the takeover by breaking up the company and selling it off in bits and pieces, leaving it a shell of it's former self.

Apple is slightly immune to this because so much of it's stock is controlled by people like Jobs and the Saudi guy who claim to care about it's long-term survival. But it's no guarantee.

Spar Aerospace is one prominent Canadian firm that was bought and broken up in this manner, mostly because they had too much cash laying around.

Being taken over is a risk that every public company takes; and there are strategies to combat such a takeover. One you might of heard of is the "poison pill resolution" which is designed to make the company unattractive to takeover by adopting resolutions that in normal circumstances would be likely to make the company unprofitable or worse.
 

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A hostile takeover is always an issue, however I could not imagine it in Apple's case... much of their "Value" is in the "Good Will" associated with their Brand... since that is very much an intangible asset it does little good for a Vulture Capitalist.

What all this means is that whenever you hear someone say... "Apple will be out of Business in 5 years" you can tell them they are Full of S**t !

Apple will be around for a long, long time... it is no longer a closed, propreitary OS... it is more Open than anything put out by Microsoft...
 

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As I recall, after their first few quarters of profitability Apple initiated a buy-back program on their stock to reduce the risk of take over. Didn't they?
 

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As a finance manager, I would say that having a balance amount of debt is good.. From a corporate finance standpoint, cost debt is cheaper than cost of equity.. (i.e. because of the tax impact via interest expense).....

Having debt allows you to free cash to invest in other activites (i.e. R&D, product innovation) that will allow a company to generate greater opportunites.. Besides, interest rates are so low right now...If I were Job, I would take the $300M and invest in R&D for future projects that would generate a greter return than 4% from interest...

Just my two cents
 

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IMHO this is another exemple of Apple stupid financial politic.

Not having any dept shows that its less profitable for your business to invest in business development than it is to get rid of the dept. For exemple, if you think you can generate a 15% return on investment buy investing in your company and the rate of your current dept is 7%, you are 'loosing' a potential gain of about 8%.

This is also a clear statement that Apple doesnt want to use dept for financement any time soon.

As for the take over: Apple stock is over rated as I previously said. They dont buy back shares from the market and dont give any dividends. So there is no point in owning any of their share at the moment. Maybe they are going to change this now that they are dept free but I am far from sure...

I dont think anyone would try a take over anytime soon, but its possible in a 10y future and buying back stock is the best defence. Its also a great way to reward shareholders...
 

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from a moralizing your customers and workers standpoint, not to mention promoting yourself and the turnaround you made for the company, getting rid of the debt is a fantastic idea
. because debt for people sucks, and it's a great accomplishment to overcome it, knowing that the little guy you've supported for the last 10 years managed to do it makes people happy.
 
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